Property rights in sequential exchange

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• dc.contributor.author Arruñada, Benito
• dc.contributor.author Zanarone, Giorgio
• dc.contributor.author Garoupa, Nuno
• dc.date.accessioned 2024-02-05T09:19:17Z
• dc.date.available 2024-02-05T09:19:17Z
• dc.date.issued 2019
• dc.description.abstract We analyze the “sequential exchange” problem in which traders have imperfect information on earlier contracts. We show that under sequential exchange, it is in general not possible to simultaneously implement two key features of markets—specialization between asset ownership and control, and impersonal trade. In particular, we show that in contrast with the conventional wisdom in economics, strong property rights—enforceable against subsequent buyers—may be detrimental to impersonal trade because they expose asset buyers to the risk of collusive relationships between owners and sellers. Finally, we provide conditions under which a mechanism that overcomes the tradeoff between specialization and impersonal trade exists. We characterize and discuss such mechanism. Our results provide an efficiency rationale for how property rights are enforced in business, company and real estate transactions, and for the ubiquitousness of “formalization” institutions that the literature has narrowly seen as entry barriers.
• dc.format.mimetype application/pdf
• dc.identifier.citation Arruñada B, Zanarone G, Garoupa N. Property rights in sequential exchange. The Journal of Law, Economics, and Organization. 2019 Mar;35(1):127-53. DOI: 10.1093/jleo/ewy023
• dc.identifier.doi http://dx.doi.org/10.1093/jleo/ewy023
• dc.identifier.issn 8756-6222
• dc.identifier.uri http://hdl.handle.net/10230/58947
• dc.language.iso eng
• dc.publisher Oxford University Press
• dc.relation.ispartof The Journal of Law, Economics, and Organization. 2019 Mar;35(1):127-53
• dc.rights © Oxford University Press. This is a pre-copyedited, author-produced version of an article accepted for publication in The Journal of Law, Economics, and Organization following peer review. The version of record Arruñada B, Zanarone G, Garoupa N. Property rights in sequential exchange. The Journal of Law, Economics, and Organization. 2019 Mar;35(1):127-53. DOI: 10.1093/jleo/ewy023 is available online at: https://academic.oup.com/jleo/article/35/1/127/5232672 and https://doi.org/10.1093/jleo/ewy023.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.subject.keyword Property rights
• dc.subject.keyword Enforcement
• dc.subject.keyword Contracts
• dc.subject.keyword Incomplete information
• dc.subject.keyword Impersonal exchange
• dc.title Property rights in sequential exchange
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/acceptedVersion